Personal Finance is More PERSONAL than it is FINANCE

I need to share a secret with you: financial advisors aren’t perfect.

What?  You already knew that?

OK, so you already knew that financial advisors aren’t perfect, but they (we) may still need to come to grips with that.  It’s not as easy as it sounds.  You see, anyone trained to be an advisor in the financial services industry proper—represented by The Big Three: banks, brokerage firms and insurance companies—is likely given more instruction on molding your perception than on actually advising you. I speak of this from first-hand experience.  Let me give you a few examples:

I was told by one of my sales managers when I was a financial advisor for a very large insurance company, still in my twenties and struggling to make ends meet, that I should buy an expensive sports car.  This would supposedly accomplish two purposes: first, I would exude the desired air of success necessary to attract big clients and second, it would create a greater sense of urgency to sell more of the company’s products to keep up with my big car payment.  This same Glengarry Glen Ross-style[i] sales manager also instructed me to arrive at a lunch destination with a hot prospect early enough that I could ask the maitre d' to call me by name, as if I was a regular at the fine dining establishment.  And if that wasn’t convincing enough, I was also to tell the waiter in advance what my favorite drink was so that when he or she approached our table I could just say, “I’ll have the usual.”  I was told to never have a beard, keep my hair off my ears and shoulders, never wear flashy ties, shave twice per day and never wear jeans or sweatpants, even for a Saturday morning trip to the grocery store.  After all, you never knew who you might sell—I mean, see. 

It was all about perception, and of course, when it came to all things financial, I was to have all of the answers, regardless of the subject matter.  If I didn’t know the answer I was to exercise my skills of creativity and persuasion to make one up.

Last week, one of my colleagues took a big, bold step in changing this culture of perception.  Carl Richards wrote a must-read article that was published in the New York Times, telling his story of an instance of personal financial mismanagement in the midst of the financial crisis that ultimately led to a short-sale on his home.  In doing so, not only did he break this barrier of perfection perception—that you never really believed anyway—but he also introduced an interesting new possibility, that we could not only learn from our financial advisor’s successes, but also from his or her mistakes.

Yes, I said “we” can learn from “our” financial advisor, because even though I’m a financial advisor (maybe even especially because), I need to have my own financial advisor.  Another colleague, Rick Kahler, author and co-author of several books including one of my all-time personal finance favorites, The Financial Wisdom of Ebenezer Scrooge, insists every financial advisor needs his or her own financial advisor.  Why?  Because money is simply too personal.  Kahler told me, “Money touches everything in our lives. How we think about it, how we use it and what we believe about it speaks volumes about how we view politics, religion, relationships, and even sex.”  He went on to say there are few topics that evoke shame quite the way money does, and I believe this may be especially true for someone who is looked to as a source of financial wisdom, like a financial advisor.

Personal finance is more personal than it is finance.

You may have heard me say this before, but it’s not a slogan I devised because it sounds clever; I genuinely believe it to be true that within the realm of financial planning and all of its numbers, charts, projections, amortizations and allocations, the most challenging and important aspects of the discipline of personal finance are not the financial, but the personal.  This is because financial planning blends both economics and emotions, and self-analysis is strewn with self-interest, self-deception, self-condemnation for some and self-aggrandizement for others.

This is why a majority of lottery winners and professional athletes find themselves in bankruptcy only a short time after their big pay day.  This is why many people who make over $250,000 per year are still living paycheck-to-paycheck.  This is why even the best financial planners need to submit themselves to the scrutiny of another advisor.  This is also why people who’ve worked to develop a healthy view of money become the “millionaire next door” with only a modest income, build successful companies from scratch, use their financial failures as a catalyst for success and in some cases find the greatest level of contentment has nothing to do with financial wealth at all.  And this is why this entire blog is dedicated to this fascinating intersection of money and life!

I’d love to hear your thoughts on financial advisors, sleazy sales tactics and money beliefs, so please join our conversation!


[i] Glengarry Glen Ross was a 1992 movie with an all-star cast including Jack Lemmon, Al Pacino, Alec Baldwin, Ed Harris and Kevin Spacey.  Alec Baldwin plays Blake, a “motivator” from the home office who is brought in to increase sales.  You can check out his motivational speech here, but pleased be warned that the language is a bit…colorful: http://www.youtube.com/watch?v=y-AXTx4PcKI  In the interest of full disclosure, I never had a manager go quite this far, but I did get the table pounding “I made one million dollars last year!  I buy a new Cadillac every two years for cash on the barrel head—because I can!” speech (the manager’s words verbatim).

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